Social Security Innovation: Coordinating Benefits (The Social Security Conundrum -- Part III)

When it comes to social security you want to be certain you are optimizing your benefit to suit your long-term financial goals, and if you are married there are additional things to consider. It’s important when planning your social security withdrawals to use coordinating benefits with your spouse.

With access to two social security checks, it may not always be best for both partners to utilize their social security at the same time. This is where a financial advisor can step in to help you begin to understand how best to maximize both social security opportunities.

The Hybrid Option

As is the case in most relationships, one partner earns more income than the other. If this is the case, it’s often important to consider a hybrid option for withdrawing from social security.

What’s a hybrid option?

A hybrid option has one partner (usually the one with a lower income) drawing from their social security sooner. Due to their lower income, and potentially shorter career span, their Social Security is lower, but it will always be lower regardless if you pull from it at 65, or 70.

By drawing on the lower income social security first, it gives the higher earning balance more time to mature, which will increase your income over your lifetime. If you can wait to draw on that larger social security until after 70, we’ve seen cases where a couple can earn an additional $500,000 from social security, simply by waiting on that larger income.

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While this solution may be right for you, it’s important to remember from our previous blog post that there are 5 important factors to consider when withdrawing from Social Security. This isn’t always going to be the optimal pursuit of your social security fund, as these other factors can make this option obsolete. This is why it is important to contact your financial advisor before you begin withdrawing from your retirement funds.